Safe and Sound

The Bank of New Glarus

New Glarus, WI
5
Star Rating
The Bank of New Glarus is an FDIC-insured bank founded in 1893 and currently based in New Glarus, WI. The bank holds equity of $29.8 million on assets of $272.1 million, according to June 30, 2017, regulatory filings.

U.S. bank customers have $214.6 million on deposit at 6 offices in WI run by 57 full-time employees. With that footprint, the bank holds loans and leases worth $208.6 million, $158.0 million of which are for real estate.

Overall, Bankrate believes that, as of June 30, 2017, The Bank of New Glarus exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three important criteria Bankrate used to evaluate American banks on safety and soundness.

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SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an an institution's financial strength, capital is crucial. It works as a cushion against losses and affords protection for accountholders when a bank is experiencing economic instability. From a safety and soundness perspective, the more capital, the better.
On our test to measure the adequacy of a bank's capital, The Bank of New Glarus received a score of 12 out of a possible 30 points, lower than the national average of 13.38.

One way to measure this buffer is looking at a bank's Tier 1 capital ratio. The Bank of New Glarus's Tier 1 capital ratio was 12.20 percent, above the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. A higher capital ratio means the bank will be better able to stand up to financial downturns.

Overall, The Bank of New Glarus held equity amounting to 10.97 percent of its assets, which was lower than the national average of 12.10 percent.

Asset Quality Score

This test's purpose is to try to understand how the bank's reserves set aside to cover loan losses, as well as overall capitalization could be affected by problem assets, such as past-due loans.

A bank with extensive holdings of these types of assets could eventually have to use capital to cover losses, reducing its equity buffer. It also means that there are likely to be many assets that are in non-accrual status and thus aren't earning money, diminishing earnings and increasing the chances of a failure in the future.

The Bank of New Glarus exceeded the national average of 37.62 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of June 30, 2017, 0.76 percent of The Bank of New Glarus's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.04 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . How large that reserve is can be a useful indicator when evaluating a bank's ability to manage problem assets, especially when compared to the total amount of problem loans. Unfortunately, the FDIC did not provide information on The Bank of New Glarus's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance affects its safety and soundness. A bank can retain its earnings, boosting its capital cushion, or use them to address problematic loans, potentially making the bank more resilient in tough times. Losses, on the other hand, lessen a bank's ability to do those things.

The Bank of New Glarus scored 20 out of a possible 30 on Bankrate's test of earnings, beating the national average of 16.52.

Return on equity, calculated by dividing net income (profit, basically) by total equity, is one widely used measure of a bank's earnings. The most recent annualized quarterly return on equity for The Bank of New Glarus was 10.26 percent, above the national average of 9.28 percent.

The bank reported net income of $1.5 million on total equity of $29.8 million for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 1.13 percent, above the 1 percent deemed satisfactory in accordance with industry standards, but below the average for U.S. banks of 1.14 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.